Safeway: What Options are Saying

David Russell|writer, OptionMonster

Thursday, 21 Jan 2010 | 7:47 AM ETCNBC.com

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Call volume surged in the supermarket stock, which rallied 5.44 percent yesterday despite a 1 percent decline for the broader market. The January 2011 25 calls and the February 22.50 calls were the two most active strikes, according to OptionMonster's proprietary tracking systems.

The longer-dated calls traded 7,500 times for $1.30, while the front-month contracts changed hands mostly for $0.45 on volume of 3,760 contracts. Volume was more than twice open interest in both strikes.

Safeway closed at $23.07 and is up 10 percent in the last month. The grocery stock gapped lower on Dec. 7 after rival Kroger cut its forecasts, but since then attracted bullish options activity after finding above $20.

Safeway ripped higher after beating analysts' forecasts the last time it reported financial results on Oct. 15. The company hasn't yet scheduled its next earnings release.

Overall options volume in SWY was five times greater than average yesterday. Calls outnumbered puts by 8 to 1.